No One ‘Likes’ Facebook — Tuesday’s IP Market Recap

by Marc Bastow | May 22, 2012 4:58 pm

[1]Another day, another plunge in Facebook (NASDAQ:FB[2]).

Facebook continued its ongoing slide[3] Tuesday, its third day of trading. After an initial dip after the bell, shares recovered by midday, then reversed course yet again to log a 9% loss, which means FB shares have shed more than a quarter of their opening-day value.

The Dow Jones Industrial Average and Nasdaq were unable to sustain the momentum from Monday’s rally as investors couldn’t quite shrug off a downgrade of Japanese debt, losing steam after early gains. The Dow finished flat at 12,502 and the Nasdaq dropped 0.3% to 2,839. The S&P 500 managed a slight gain to 1,316, however.

Investors were encouraged early as a National Association of Realtors report[4] showed existing home sales surged to a two-year high. Existing home sales rose 3.4% in April to an annual rate of 4.62 million, up 10% year-over-year and the highest rate since May 2010. Home affordability also came in at record levels. However, Fitch Ratings Service downgraded Japan, the world’s No. 3 economy, and suggested further downgrades could be coming, throwing a damper on the U.S. good news.

Markets also were encouraged early by better-than-expected results from Best Buy (NYSE:BBY[5]), Ralph Lauren (NYSE:RL[6]) and Williams-Sonoma (NYSE:WSM[7]).

Best Buy, which recently lost its CEO to scandal and has been closing stores, reported solid earnings [8]and also reaffirmed its profit guidance of $3.50 to $3.80 a share, vs. analyst expectataions for $3.58. BBY shares gained just more than 1%.

Williams-Sonoma’s earnings surprised to the upside[9], and it also confirmed full-year earnings guidance, sending shares up 3.3% on the day. Ralph Lauren reported solid earnings growth and announced a doubling of its dividend[10], but did warn of a slower Q2. Still, investors focused on the good, sending shares up 2.7%.

Despite finishing flat, the Dow had several strong performances among its components. JPMorganChase (NYSE:JPM[11]) finally came out of its corner after a standing eight count, sporting a nearly 5% gain. SectormateBank of America (NYSE:BAC[12]) also picked up more than 2%. Wal-Mart (NYSE:WMT[13]) continued a strong run, hitting a 10-year high of $63.95.

After the bell, Dell (NASDAQ:DELL[14]) announced disappointing first-quarter earnings and a Q2 estimate that fell short of analyst estimates. Consumers and businesses held off on buying personal computers, and the company continued to focus on profit margins instead of sales growth. DELL shares were down 10% in early after-hours trading.

Three Up

Ariba (NASDAQ:ARBA[15]): Up 19.2% ($7.23) to $44.87.

Radian Group (NYSE:RDN[16]): Up 9.2% (22 cents) to $2.61.

Urban Outfitters (NASDAQ:URBN[17]): Up 7.4% ($1.94) to $28.10.

Three Down

Arch Coal (NYSE:ACI[18]): Down 7.4% (57 cents) to $7.15.

Cree (NASDAQ:CREE[19]): Down 6.5% ($1.89) to $27.20.

Netflix (NASDAQ:NFLX[20]): down 5.6% ($4.03) to $67.71.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he did not hold a position in any of the aforementioned securities.